Not made by elves — more like slaves

As they compete to get Christmas shoppers the newest tablets, phones and cameras, electronics makers contract with suppliers, factories and labor recruiters across the globe.

For consumers, this means a bonanza of ever-cheaper, more-convenient gadgets. At the opposite end of the supply chain, however, are people whose lives are often made worse by the game. A Bloomberg News investigation underscores how common it is that workers who make these products become indentured servants, only a step removed from slavery.

Their plight results from the way employment recruiters in the poorest of countries charge steep fees to people who want to migrate to jobs in overseas manufacturing hubs. The workers are thus saddled with debt that they must work for many months or years to pay off.

To help stamp out this practice, the U.S. government has proposed new rules that would prohibit the charging of recruitment fees for any work it contracts. Because the U.S. government is the world’s largest purchaser of goods and services, this change could help root out the practice — but only if the U.S. punishes companies that violate the rules.

The Electronic Industry Citizen Coalition’s code of conduct already forbids charging workers “excessive” recruitment fees — but doesn’t say what that means. Companies assume that it’s any amount exceeding the maximum established by a worker’s home or host country — for instance, the $800 Nepal sets for Malaysia-bound workers. Yet 80 percent of 60 Nepalese who had worked in Malaysia and were interviewed by Bloomberg News said they were charged more. Apple limits fees to one month’s salary. But last year, when the company audited just some of the factories in which migrant workers made its products, it discovered $6.4 million in fees beyond the ceiling.

One reason that workers end up paying more than the limit is that one charge leads to another. Recruiters might impose an initial fee within industry norms, then they, or brokers who come into play later in the process, will spring additional charges on the worker for such things as processing, immigration, training and transportation. Having borrowed money or sunk their life savings into the first fee, workers keep paying, desperate to recoup their losses, even if it means turning to loan sharks to cover the added payments.

To make matters worse, employers almost always seize the worker’s passport, so he or she is further inhibited from quitting — and becoming an undocumented alien in a foreign land.

Under U.S. law, this kind of debt bondage constitutes human trafficking. U.S. criminal law is rarely invoked in such cases, however, because the recruiters are usually not American and have no U.S. presence.

So it is through federal procurement policies that the United States can have the most influence. Rules that have been drafted to carry out an executive order signed by President Obama a year ago would bar federal purchases from companies whose workers have been charged fees or have had their passports taken. Presumably, many of the electronics sellers that comply in order to win lucrative U.S. government (especially military) contracts would extend the policy to all their work.

The draft rules would require contractors to notify the government of any credible violations. And companies with contracts worth at least $500,000 would have to have plans to prevent transgressions. The rules should be put into effect soon after Dec. 20, when the period for public comments closes.

Then, the new policy will need to be enforced. Here, the United States has a poor track record. In the early 2000s, third-country nationals working for U.S. contractors to support diplomatic and military missions in Iraq and Afghanistan were found to be victims of debt bondage, and the abuses continued after they were exposed.

Even though the new rules place the onus on companies to abolish charging fees, government investigators will still have to look for human trafficking connected with procurement processes. They will need the resources it takes to vigorously pursue cases. And contractors found to break the rules will need to be terminated, unpaid.